IP Law Daily Biscotti patent on video calling not invalid; Microsoft’s appeal of IPR failed
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Thursday, December 28, 2017

Biscotti patent on video calling not invalid; Microsoft’s appeal of IPR failed

By Mark Engstrom, J.D.

In a precedential ruling on the appeal of three inter partes review (IPR) decisions by the Patent Trial and Appeal Board, the U.S. Court of Appeals for the Federal circuit has decided that substantial evidence supported the Board’s finding that Microsoft failed to show that the challenged claims of a Biscotti Inc. patent on "tools and techniques for providing video calling solutions" were invalid as anticipated or obvious. The judgment of the Board was therefore affirmed. Circuit Judge Pauline Newman wrote separately in dissent (Microsoft Corporation v. Biscotti, Inc., December 28, 2017, O’Malley, K.).

Biscotti Inc. owns U.S. Patent No. 8,144,182, titled "Real Time Video Communications System." The patent describes "real-time video conferencing where two or more users communicate, over a network, in a conference that includes video and audio of each participant," and the patented system includes "components such as video communication devices, the internet, video sources, display devices, and set-top boxes."

Biscotti sued Microsoft for patent infringement, and Microsoft filed three IPRs that challenged multiple patent claims based on anticipation and obviousness. The Board instituted review of claim 6 (describing a video communication system) and claim 69 (describing a method of providing video calling) based on anticipation, and instituted review of multiple claims that depended from claims 6 and 69, based on anticipation and obviousness.

The first two IPRs—IPR2014-01457 ("57 IPR") and IPR2014-01458 ("58 IPR")—focused on independent claim 6 and claims that depended from claim 6. The third IPR—IPR2014-01459 ("59 IPR")—focused on independent claim 69 and claims that depended from claim 69. In each IPR, the Board found that Microsoft failed to prove by a preponderance of the evidence that the challenged claims were anticipated by, or obvious over, U.S. Patent No. 7,907,164 ("Kenoyer"), which described an "Integrated Videoconferencing System." Issued in 2011, Kenoyer disclosed a "multi-component videoconferencing system" that "may include a camera, microphones, speakers, and a codec possibly used in conjunction with a computer system."

Anticipation standard. Microsoft argued that the Board had applied an "unduly narrow anticipation standard" in its final written decision. According to Microsoft, a prior-art reference must be viewed in its "totality" for what it described; it did not have to disclose anything more than whatever was described in the challenged invention.

Contrary to Microsoft’s contentions, the Board had delineated the proper anticipation standard in its final written decisions. The Board had noted, for example, that a prior-art reference had to provide every element of the claimed invention, arranged as in the claim, in order to anticipate. In addition, the Board stated that a claim did not need to "expressly spell out" all limitations, combined as in the claim, if a person of skill in the art (POSA) would "at once envisage" the arrangement or combination. Finally, the Board correctly stated that anticipation was not proved by "multiple, distinct teachings that the artisan might somehow combine to achieve the claimed invention." The Board thus correctly articulated the anticipation standard, according to the court.

Microsoft also challenged the Board’s application of the anticipation standard. According to Microsoft, the Board had misapplied the standard by requiring Kenoyer’s disclosure to "exactly" match the limitations of the ’182 patent.

The court acknowledged that the Board "may have used wording such as ‘identically’ more liberally than it should have" because the anticipation analysis indisputably allowed "some flexibility." Nevertheless, the court found that the Board’s analysis "did not suffer from a misapplication of the anticipation standard."

Claim 6. On appeal, the parties disputed whether Kenoyer disclosed a storage medium with four types of program instructions, which depended on the meaning of a sentence that was found near the end of the specification in Kenoyer: "[e]mbodiments of a subset or all (and portions or all) of the above may be implemented by program instructions stored in a memory medium or carrier medium and executed by a processor." The parties disputed whether the sentence referred to Figure 22, which was described in the lines that immediately preceded the sentence, or to all previous figures and embodiments of the patent.

The court acknowledged that the Board was presented with a "close question." According to Microsoft, the specification’s three paragraphs between the summary of each step in Figure 22 and claim 1 used broad language that referred generally to "embodiments," which might be interpreted as referring to all embodiments of the patent. In addition, the final paragraph stated that "[f]urther modifications and alternative embodiments of various aspects of the invention may be apparent to those skilled in the art in view of this description." In the court’s view, the broad language of those paragraphs, without any reference to Figure 22, might imply that the paragraphs referred more generally to the embodiments throughout the patent.

Nevertheless, Biscotti’s reading also had merit. The first two paragraphs after the paragraph that expressly described Figure 22 used different words—referring only to "embodiments"—than the last paragraph of the specification, which referred to "embodiments" within the context of "the invention." According to the court, one could validly read the last paragraph as referring more generally to the invention as a whole, since the specification specifically referred to the invention, whereas the previous two paragraphs referred only to the description of Figure 22.

Microsoft’s arguments were not unreasonable, the court conceded, but the question of anticipation was not being reviewed de novo. Anticipation was a question of fact, and the Board’s findings were being reviewed for substantial evidence. As Biscotti had correctly argued, "[h]owever ‘close’ certain factual questions may have been before the Board, the Board was entitled, at the very least, to credit Biscotti’s evidence and its expert’s view of Kenoyer’s disclosure over Microsoft’s, and to find that Microsoft failed to meet its burden of proof." Under the proper standard of review, the case could not be a close case on appeal, according the court concluded. "Whatever arguable merit there may be to Microsoft’s reading of Kenoyer, it was certainly not compelled here."

Given the evidence before the Board and its underlying factual findings, the court decided that substantial evidence supported the finding that Kenoyer did not anticipate claim 6.

Claim 69. The primary dispute regarding claim 69 was whether Kenoyer taught the limitation "receiving, on the audiovisual input interface, a set-top box audiovisual stream from a set-top box, the set-top box audiovisual stream comprising a set-top box video stream and a set-top box audio stream."

Microsoft’s brief on appeal was far more detailed and contained substantial new arguments regarding Kenoyer’s purported anticipation of that limitation, the court noted. However, Microsoft should have included those arguments in its petition to institute. The general rule was that any argument that was not raised before the Board was waived on appeal.

Because the Board’s factual findings in favor of Biscotti were supported by substantial evidence, and because any supplemental argument to refute those findings on appeal was waived, the court affirmed the Board’s finding that Microsoft failed to prove that claim 69 was anticipated by Kenoyer.

Construction of "set-top box". Microsoft argued that the Board did not use the broadest reasonable interpretation of the term "set-top box." According to Microsoft, the term was defined in the patent as "any device that can provide video tuning, decryption and/or decoding functionality, especially as that functionality relates to reception of broadcast, cable, and/or satellite television signals." In Microsoft’s view, that "broad" definition included televisions and computers.

The court noted that Microsoft failed to explain how a computer—especially the computer in Kenoyer—would receive a broadcast, cable, or satellite television signal. Nothing was proffered to explain how a POSA would understand the computer in Kenoyer to be a set-top box with the special functionality that was required by Microsoft’s definition.

Obviousness. According to Microsoft, the Board had erred in its obviousness analysis for the same reasons that it had erred in its anticipation analysis. Because the Board’s findings regarding claims 6 and 69 were supported by substantial evidence, and because Microsoft did not argue separately that the Board had erred in its obviousness analysis, the court affirmed the obviousness holdings.

Dissent. Circuit Judge Pauline Newman concluded that claims 6 and 69 "directly read on, and [we]re anticipated by," the prior art system that was described in Kenoyer, a reference that described the same invention that was disclosed in the challenged claims. Every claim clause was shown in Kenoyer, Judge Newman explained, and every claim component was previously known, and performed the same function in the same way in the same combination. The claims at issue were therefore anticipated "under the most rigorous application of the law of anticipation."

Further, the claims on appeal recited no distinction from the Kenoyer videoconferencing system, as to any component or function or arrangement. According to Judge Newman, the majority had "search[ed] for distinctions that [we]re neither described nor claimed, contrary to the law of anticipation." Ultimately, the requirements of anticipation were "clearly met" because Kenoyer sufficiently described the claimed invention and placed the public in possession of it.

The case is Nos. 2016-2080, 2016-2082, and 2016-2083.

Attorneys: Constantine L. Trela, Jr. (Sidley Austin LLP) for Microsoft Corp. John C. O’Quinn (Kirkland & Ellis LLP) for Biscotti, Inc.

Companies: Microsoft Corp.; Biscotti, Inc.

MainStory: TopStory Patent FedCirNews

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